NY Bank Regulator Says It Won't Block Barclays Currency Settlement

New York bank regulator Benjamin Lawsky indicated he won’t block Barclays Plc from settling a probe into its foreign-currency trading operations by the U.S. Justice Department, provided the bank agrees to cooperate with a probe of his own that could stretch for months afterward.

Lawsky, who regulates foreign banks with charters in New York, said he wouldn’t stand in the way of a firm seeking to settle currency-rigging allegations. At least five global banks including Barclays are expected to announce agreements with the Justice Department at the same time in coming months, people familiar with the talks have said.

Lawsky’s remarks Tuesday at a conference in New York represent a departure from his position in November. Then, he cautioned Barclays against entering a group settlement with regulators in Europe and the U.S., in part because his New York Department of Financial Services was beginning its own investigation into how banks may have benefited from their use of electronic currency-trading algorithms.

Shortly after, the London-based bank pulled out of a settlement whose parties included the U.K.’s Financial Conduct Authority, as well as the U.S. Commodity Futures Trading Commission and Office of the Comptroller of the Currency.

Barclays is the only major bank currently in settlement discussion with the Justice Department over currency rigging and under investigation by Lawsky’s DFS.

Kerrie Cohen, a Barclays spokeswoman, declined to comment.

Monitors have been installed at Barclays and Deutsche Bank AG as part of the New York probe. The German lender isn’t expected to be among the first group of banks to settle currency-rigging claims, people familiar with the matter have told Bloomberg News.

‘Last Look’

Lawsky is investigating whether banks’ electronic-trading platforms allow them to take a “last look” at currency orders that allow them to back out of unfavorable trades.

Lawsky said Tuesday that banks reaching a deal with the Justice Department would need to agree to allow him to continue his probe.

“Our probe will take months, not years,” he said at a forum on risk and compliance hosted by Dow Jones. “DFS is not in a position to settle” unless electronic trading is carved out for his review to go on.

Interest in the last-look practice from enforcers has grown out of a broader investigation into the manipulation of benchmarks and client orders in the $5.3 trillion-a-day currency market.

In addition to Barclays and Deutsche Bank, Lawsky’s office has sent subpoenas to Goldman Sachs Group Inc., BNP Paribas SA, Credit Suisse Group AG and Societe Generale SA as part of his review of currency trading at banks, a person familiar with the matter has said. The information demands don’t necessarily indicate the four banks did something wrong, said the person, who asked not to be identified because the matter is confidential.

New York bank regulator Benjamin Lawsky indicated he won't block Barclays Plc from settling a probe into its foreign-currency trading operations by the U.S. Justice Department, provided the bank agrees to cooperate with a probe of his own that could stretch for months...